Reverse Mortgage FAQ

In this article we will discuss and answer different frequently asked questions as they apply to reverse mortgages. Treat this article as your own personal reverse mortgage FAQ.

What is a reverse mortgage?

It is a loan against the equity of your home and is given to a senior homeowner who is 62 years of age or older.

Are there any other qualifications?

Only that your home has equity, and little or no debt. Other than that, you do not have to earn a specific amount of yearly income, have a certain credit score, or possess any other assets to be used as collateral for the loan.

How can I receive my loan?

There are three different options. You can receive it all in one lump sum, receive it in monthly installments, or choose to take out a line of credit to be used against the loan.

How is a reverse mortgage paid back?

A reverse mortgage is required to be paid back when the homeowner dies, moves out of the home, or sells it. Then, the proceeds of the sale go to the lending institution. If, the proceeds from selling the home exceed the loan amount, then the owner of the home is awarded the difference. If the owner has died, then the difference goes to the owner's heirs. When the proceeds are not enough to pay the loan off, then the lending institution itself absorbs the difference.

How is a reverse loan calculated?

Your loan will primarily be determined by the appraisal on your property. Other factors include the interest rate, and your age. The older you are, the more amount of money you will receive on your loan. Also, depending upon how you decide to receive the money and the location of your property determined how your reverse mortgage is calculated.

What can I spend my loan on?

If you have a mortgage currently on your home, then you're required to first pay that off. However, once it is paid off, or if you have no mortgage currently on your home, then you can spend your loan on whatever you desire.

There you have it -- a simple, straightforward reverse mortgage FAQ. Hopefully your questions have been answered by this article. If not, I urge you to consult with more resources, and do further research as it applies to reverse mortgage loans. This is a wonderful option available to the senior who is looking for a loan to help them with retirement.